A partially completed pension spreadsheet showing the relationships among the elements that comprise the defined benefit pension plan of Universal Products is given below. The actuary's discount rate is 5%. At the end of 2022, the pension formula was amended, creating a prior service cost of $300,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year, as well as, the previous two years. Required: Fill in the missing amounts. Note: Enter your answers in thousands (i.e., 5,500 should be entered as 5.5). Enter credit amounts with a minus sign. ($ in thousands) Balance, January 1, 2024 Service cost Interest cost, 5% Expected return on assets Adjust for: Loss on assets Amortization: Prior service cost Amortization: Net loss Gain on PBO Prior service cost Cash funding Retiree benefits Balance, December 31, 2024 PBO Plan Assets $ (860.0) $ 600.0 (43.0) $ (929.0) $ Prior Service Cost - AOCI $ 600.0 $ Net Loss - AOCI 285.0 $ 270.0 $ 86.0 17.0 Pension Expense 103.0 $ 106.0 (48.0) 58.0 Cash (90.0) Net Pension (Liability) / Asset $ $ (260.0) 30.0 (230.0)

A partially completed pension spreadsheet showing the relationships among the elements that comprise the defined benefit pension plan of Universal Products is given below. The actuary's discount rate is 5%. At the end of 2022, the pension formula was amended, creating a prior service cost of $300,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year, as well as, the previous two years. Required: Fill in the missing amounts. Note: Enter your answers in thousands (i.e., 5,500 should be entered as 5.5). Enter credit amounts with a minus sign. ($ in thousands) Balance, January 1, 2024 Service cost Interest cost, 5% Expected return on assets Adjust for: Loss on assets Amortization: Prior service cost Amortization: Net loss Gain on PBO Prior service cost Cash funding Retiree benefits Balance, December 31, 2024 PBO Plan Assets $ (860.0) $ 600.0 (43.0) $ (929.0) $ Prior Service Cost - AOCI $ 600.0 $ Net Loss - AOCI 285.0 $ 270.0 $ 86.0 17.0 Pension Expense 103.0 $ 106.0 (48.0) 58.0 Cash (90.0) Net Pension (Liability) / Asset $ $ (260.0) 30.0 (230.0)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5 % x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $98,000 at the end of 2024 and the company's actuary projects her salary to be $320,000 at retirement. The actuary's discount rate is 8%. At the beginning of 2025, changing economic conditions caused the actuary to reassess the applicable discount rate. It was decided that 9% is the appropriate rate. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of 2025 with respect to Davenport. Note: Do not round intermediate calculations. Round your final answer to…
Clark Industries has a defined benefit pension plan that specifies annual, year-end retirement benefits equal to: 1.6% × Service years × Final year's salary Stanley Mills was hired by Clark at the beginning of 2005. • Mills is expected to retire at the end of 2049 after 45 years of service. • His retirement is expected to span 15 years. At the end of 2024, 20 years after being hired, his salary is $84,000. • The company's actuary projects Mills's salary to be $310,000 at retirement. The actuary's discount rate is 6%. For all requirements, round final answers to the nearest whole dollars. Do not round intermediate calculations. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Estimate the amount of Stanley Mills's annual retirement payments for the 15 retirement years earned as of the end of 2024. 2. Suppose Clark's pension plan permits a lump-sum payment at retirement in lieu of annuity payments. Determine…
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A partially completed pension spreadsheet showing the relationships among the elements that comprise the defined benefit pension plan of Universal Products is given below. The actuary's discount rate is 5%. At the end of 2019, the pension formula was amended, creating a prior service cost of $160,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year as well as the previous two years. Required:Fill in the missing amounts. (Enter your answers in thousands rounded to 1 decimal place.) Prior Net Pension Plan Service Net Loss Pension (Liability) ($ in thousands) PBO Assets Cost – AOCI – AOCI Expense Cash / Asset Balance, Jan. 1, 2021 $(920.0) $660.0 $152.0 $92.0 $(260.0) Service cost 112.0 Interest cost, 5% (46.0) Expected return on assets (52.8) Adjust for: Loss on assets 20.0…
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.6% x service years x final year's salary. payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $84,000 at the end of 2024 and the company's actuary projects her salary to be $250,000 at retirement. The actuary's discount rate is 6%. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 2. Estimate by the projected benefits approach the amount of Davenport's annual retirement payments earned as of the end of 2024. 3. What is the company's projected benefit obligation at the end of 2024 with respect to Davenport? Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar. 4. If no estimates are changed in…
The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2024 and 2025 are presented below ($ in millions): Information Provided by Pension Plan Actuary: a. Projected benefit obligation as of December 31, 2023 = $3,350. b. Prior service cost from plan amendment on January 2, 2024 = $650 (straight-line amortization for 10-year average remaining service period). c. Service cost for 2024 = $650. d. Service cost for 2025 = $700. e. Discount rate used by actuary on projected benefit obligation for 2024 and 2025 = 10%. f. Payments to retirees in 2024 $510. g. Payments to retirees in 2025 $580. h. No changes in actuarial assumptions or estimates. 1. Net gain-AOCI on January 1, 2024 = $375. J. Net gains and losses are amortized for 10 years in 2024 and 2025. Information Provided by Pension Fund Trustee: a. Plan asset balance at fair value on January 1, 2024 = $2,400. b. 2024 contributions $670. c. 2025 contributions $720. d. Expected long-term rate…
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Clark Industries has a defined benefit pension plan that specifies annual, year-end retirement benefits equal to: 1.5% × Service years Final year's salary Stanley Mills was hired by Clark at the beginning of 2005. Mills is expected to retire at the end of 2049 after 45 years of service. His retirement is expected to span 15 years. At the end of 2024, 20 years after being hired, his salary is $94,000. The company's actuary projects Mills's salary to be $410,000 at retirement. The actuary's discount rate is 6% For all requirements, round final answers to the nearest whole dollars. Do not round Intermediate calculations. Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Estimate the amount of Stanley Mills's annual retirement payments for the 15 retirement years earned as of the end of 2024. 2. Suppose Clark's pension plan permits a lump-sum payment at retirement In lieu of annuity payments. Determine the…